NEW YORK — Stocks skidded lower today after a steeper-than-expected decline in sales of existing homes wiped away some of the market's optimism about upbeat earnings reports. The major indexes each lost more than 1 percent, including the Dow Jones industrial average, which fell more than 125 points.

The National Association of Realtors said sales resumed their decline in June after a slight rebound in May. Existing home sales declined by 2.6 percent in June, well beyond the 1 percent drop economists had forecast.

The sales drop was a reminder that the housing market, and the overall economy, is still troubled in many areas. And that persuaded many stock investors to cash in some of their gains from a rally that began last week.

Investors were also absorbing a mixture of earnings reports from names like Ford Motor Co., which reported a big loss, and Dow Chemical Co., which said higher costs for raw materials sent earnings down sharply. But drug makers Bristol-Myers Squibb Co. and Eli Lilly & Co. both reported higher earnings as the weak dollar boosted foreign sales, and Amazon.com Inc. turned in a solid report that beat expectations.

Analysts have said that so far, second-quarter earnings reports have been better than many investors expected. That had lifted the market's mood in recent sessions.

Stephen Goddard, co-portfolio manager of the AFBA 5Star Balanced Fund, said the decline in housing numbers coming alongside some better-than-expected earnings reports shouldn't be surprising because mixed reports are common during economic downturns.

"All the numbers don't turn at the same time," he said of economic readings. "It's usually one by one by one. You start seeing incremental improvement."

In late morning trading, the Dow fell 129.46, or 1.13 percent, to 11,502.92. The blue chip index rose nearly 170 points the past two days, so a pullback as part of the normal ebb and flow of trading wouldn't have come as a surprise.

Broader stock indicators also declined Thursday. The Standard & Poor's 500 index fell 14.22, or 1.11 percent, to 1,267.97, and the Nasdaq composite index declined 21.05, or 0.91 percent, to 2,304.83.

Stocks rose sharply the past two sessions as the price of oil continued its decline. The price is now down more than $20 after just weeks ago hitting a record above $147 a barrel. Oil fluctuated Thursday. A barrel of light, sweet crude fell 1 cent to $124.43 on the New York Mercantile Exchange.

Bond prices rose Thursday after the housing report sent some investors looking for the safety of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 4.06 percent from 4.12 percent from late Wednesday.

The dollar was mixed against other major currencies, while gold prices rose.

In corporate news, Ford said it lost $8.67 billion in the second quarter, largely because of a reduction in the value of assets. The company also said it will bring six European small car models to North America by the end of 2012 as it adjusts production because of high gasoline prices. The stock fell 62 cents, or 10 percent, to $5.41.

Dow Chemical fell 60 cents to $33.64 after reporting sharply higher costs for energy and raw materials contributed to a 27 percent decline in profit.

Drug makers Bristol-Myers and Eli Lilly reported higher earnings as the weak dollar boosted foreign sales and several key drugs saw big jumps in U.S. sales. Bristol-Myers beat expectations with an 8 percent rise in quarterly profit, while Eli Lilly reported a 44 percent rise in profit that narrowly missed forecasts. Bristol-Myers rose 70 cents to $22.59 and Eli Lilly advanced 75 cents to $48.37.

Industrial conglomerate 3M rose $1.91, or 2.7 percent, to $72.71 after reporting its second-quarter profit rose slightly on strong double-digit growth in international markets.

Amazon.com jumped $10.80, or 15 percent, to $81.34 after reporting late Wednesday that second-quarter earnings more than doubled to easily top analysts' expectations. The Internet retailer also raised its full-year revenue projections.

The government reported that the number of people filing first-time claims for unemployment benefits bolted past 400,000 last week as companies trimmed their work forces to cope with a slowing economy. The Labor Department reported that these new applications rose by 34,000 to 406,000 for the week ending July 19. That matches the level seen in late March. The last time claims were higher was after the devastation of the Gulf Coast hurricanes in mid-September 2005. Then, they spiked to 425,000.

Declining issues outnumbered advancers by about 3 to 1 on the New York Stock Exchange, where volume came to 639.8 million shares.

The Russell 2000 index of smaller companies fell 7.09, or 0.99 percent, to 712.10.

Overseas, Japan's Nikkei stock average rose 2.18 percent. Britain's FTSE 100 fell 1.63 percent, Germany's DAX index shed 1.46 percent, and France's CAC-40 fell 1.38 percent.